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Saint Agnes Medical Center in Fresno, Kaweah Delta Medical Center in Visalia, Adventist Medical Center in Hanford, Madera Community Hospital and Clovis Community Medical Center have higher penalties this year, the second year of the program.

Since Medicare began the quality incentive program last year, hospitals have worked to improve in performance areas measured by Medicare, including clinical standards of care, patient satisfaction and readmission rates.

Two hospitals in the central San Joaquin Valley -- Fresno Heart & Surgical and Sierra View District Hospital in Porterville -- are getting bonuses from Medicare for improving performance in key areas.

Four Valley hospitals increased their quality scores, but not enough to avoid penalties. Community Regional Medical Center in Fresno, Coalinga Regional Medical Center, Adventist Medical Center in Reedley and Tulare Regional Medical Center must do more to get full reimbursements from Medicare.

Community Medical Centers, which operates Fresno Heart & Surgical as well as Community Regional Medical Center, "continues to focus on government program initiatives such as value-based purchasing and readmission and we have seen improvements in these areas over time," Thomas Utecht, chief quality officer, said in a written statement.

According to an analysis by Kaiser Health News, Medicare is reducing reimbursement rates for at least two-thirds of hospitals in 17 states, including California. This year's penalties kicked in Oct. 1, the start of the federal fiscal year, and will end September 2014.

How hospitals improved from the 2012-13 year is part of this year's score. Tulare Regional has seen the greatest improvement of area hospitals, but remains the institution with the highest penalty at just under 1%. The hospital is docked .97% of Medicare reimbursements for patient medical services.

Hospital officials expect the penalty to total about $60,000.

The maximum penalty in 2014 is 2% and increases to 3% in 2015.

Tulare Regional reduced its penalty from 1.73% to .97%. CEO Shawn Bolouki said he reviews the hospital's quality standards each week.

Tulare Regional belongs to the California Health Engagement Network, an organization working to improve hospital quality. "We have been recognized for reducing our readmissions," Bolouki said.

The readmission rate indicates whether hospitals are releasing patients too soon, causing them to return to the hospital for treatment.

But reducing the hospital's stubbornly high penalty could have to wait until completion of a 57-bed, four-story tower in the next year.

Tulare Regional's current design of semi-private rooms creates some patient dissatisfaction, Bolouki said. "Once the new tower is done and all rooms are private, we hope we can see gains in that area."

Last year, hospitals were rated 30% on patient satisfaction and 70% on clinical standards, such as performing a blood culture on patients suspected of having pneumonia when they come to emergency departments. This year, patient satisfaction accounts for 30% of a hospital's score, clinical standards are 45% and death rates -- a new measurement -- accounts for 25%.

Valley hospital officials said the addition of death rates could contribute to higher penalties, but the biggest challenge is reducing readmission rates. Medicare looks at death rates for heart attacks, heart failure and pneumonia.

Saint Agnes, Kaweah Delta focus on heart

"Probably the greatest need for us in the area is reducing readmissions in congestive heart failure patients," Saint Agnes spokeswoman Kelley Sanchez said. The hospital has a robust cardiac program, she said, "so we see a lot with congestive heart failure."

Saint Agnes' Medicare penalty increased this year to .56% from .14%. The hospital estimates the penalty at $100,000, or .27% of its total net patient revenue.

The north Fresno hospital is part of Trinity Health, one of the largest Catholic-based health care systems in the nation. Reducing readmissions for heart patients is "the No. 1 area of focus as a system," Sanchez said.

Saint Agnes has taken steps to cut readmissions. Nurses make doctor appointments for heart patients at the time of discharge and call patients after discharge to make sure they are taking medications and keeping doctor appointments.

Reducing readmissions for heart patients also ranks among the top priorities at Kaweah Delta Medical Center in Visalia, said Gary Herbst, senior vice president and chief financial officer for the hospital health care district.

Herbst said he plans to go before the district board Dec. 9 with a proposal to create a heart-failure clinic near the hospital where patients' health could be managed after discharge.

Patients in Tulare County, where poverty is among the highest in the state, have difficulty getting to doctors after discharge for follow-up care, Herbst said. "So we're kind of taking matters into our own hands," he said.

The hospital has something at stake. The .49% penalty is more than double last year's penalty of .24% and totals about $390,000, Herbst said. While that is less than one-tenth of 1% of the district's $460 million budget, the hospital takes the reduction seriously, Herbst said.

"We want to provide excellent clinical care and excellent processes and (for) our patients to have an excellent experience," he said.

The Medicare quality incentive program has helped hospitals focus more attention on quality and safety and the patient experience, Herbst said. "It's a good thing for patients and a good thing for the industry."